Alberta's economy continues to boom: RBC Economics

TORONTO, March 19, 2013 /CNW/ - Despite facing challenges, Alberta's economy
will continue its impressive boom through 2013 after leading the country's
economic growth in 2012, according to the latest RBC Economics Provincial
Outlook released today. RBC forecasts a provincial real GDP growth rate of
three per cent thanks to strong crude oil production as well as high levels of
capital investment, employment and population growth.
"Even though the province recently announced a $2 billion budget deficit,
Alberta is unquestionably in the midst of an impressive economic boom -
particularly with capital investment fuelling manufacturing and wholesalers'
sales. Attractive employment opportunities are also bringing new migrants to
the province, boosting population growth and in turn, consumer spending," said
Craig Wright, senior vice-president and chief economist, RBC. "As the economy
continues to thrive across the majority of key industries, Alberta will remain
at the top-end of Canada's economic growth rankings this year."
The RBC report notes, however, that there are a couple of weak spots in
Alberta's economic outlook. Statistics Canada's latest Public and Private
Investment survey showed some signs that non-residential construction - a
major catalyst of economic activity in the province - is slowing.
Investment intentions in the oil and gas sector are essentially flat for 2013.
RBC says that Alberta's energy developers' plans are being weighed down by
rapidly rising energy production in the U.S., pipeline bottlenecks and the
'bitumen bubble', all of which contributed to lower crude oil prices in Canada
relative to global benchmarks late in 2012.
"Weaker than expected oil prices put a multi-billion dollar hole in Alberta
government's revenues, and led to a 2013 provincial budget that detailed
renewed public sector spending restraint," explained Wright. "Still, any
pullback in capital spending will be short-lived as pipeline issues are
addressed and crude oil price relationships normalize."
The upcoming decision on the fate of the northern section of the Keystone XL
pipeline project will provide significant insight on future investment
prospects in the oil sands. RBC Capital Markets' Global Research equity
analysts ascribe a 75 per cent probability on the project being approved.
Overall, any dark clouds that are currently hanging over the province will
clear by 2014, paving the way for strong business and consumer activity.
The RBC Economics Provincial Outlook assesses the provinces according to
economic growth, employment growth, unemployment rates, retail sales, housing
starts and consumer price indices. The full report and provincial details are
available online as of 8 a.m. ET today at
rbc.com/economics/market/pdf/provfcst.pdf.
Craig Wright, RBC Economics Research, 416 974-7457 Robert Hogue, RBC
Economics Research, 416 974-6192 Elyse Lalonde, Corporate Communications,
RBC Capital Markets, 416 842-5635
SOURCE: RBC
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CO: RBC
ST: Ontario
NI: FIN ECO
-0- Mar/19/2013 09:00 GMT